In 2000 Bob Whitman was appointed CEO of Franklin Covey Co. (NYSE:FC). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Bob Whitman's Compensation Compare With Similar Sized Companies?
According to our data, Franklin Covey Co. has a market capitalization of US$523m, and paid its CEO total annual compensation worth US$2.7m over the year to August 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$566k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.8m.
Thus we can conclude that Bob Whitman receives more in total compensation than the median of a group of companies in the same market, and of similar size to Franklin Covey Co.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Franklin Covey has changed from year to year.
Is Franklin Covey Co. Growing?
Franklin Covey Co. has reduced its earnings per share by an average of 77% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 10%.
Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Franklin Covey Co. Been A Good Investment?
I think that the total shareholder return of 110%, over three years, would leave most Franklin Covey Co. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by Franklin Covey Co., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years. However, we can't argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. Shareholders may want to check for free if Franklin Covey insiders are buying or selling shares.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.